subject: Reverse Mortgage or Refinance; A Growing Concept Among Senior Citizens [print this page] Reverse Mortgage or Refinance; A Growing Concept Among Senior Citizens
Home owners looking to pay their current mortgage but constrained on resources could think of refinance or reverse mortgage as the solution to their problem. In fact, mortgage refinance has been one of the most widely adopted recourses for the senior citizens who are more constrained for finance in comparison to others.
Why Refinance
Mortgage refinance is a growing concept among the senior citizens. Not only when they decide to buy another house or renovate the existing one, but they require money for various other purposes like payment of medical bills, supplementing the retirement and a host of others.
How It Helps
A close look at the mortgage market will clarify that
* A reverse mortgage can help senior citizens to convert their home equity into cash and they can use the cash without having to actually sell the house; * While in traditional mortgage financing, the borrower makes a monthly payment, there is no such payments in case of mortgage refinancing; * It is the lender that sends money in case of reverse mortgage and as long as one resides in the home mortgaged, he or she will not have to repay anything; and * Reverse mortgage is more appealing for the senior citizens as the proceeds are usually tax free and most of them do not have income restrictions tagged either.
Types of Reverse Mortgages
In the current mortgage market there are three types of reverse mortgages such as
* Single purpose reverse mortgage that is offered by the nonprofit organizations as well as the state and local governments; * Reverse mortgages that are federally insured and also known as equity conversion mortgages those are financed by US Department of Housing and Urban Development. * Proprietary reverse mortgage that are private mortgage loans that are developed as well as backed by companies.
Among all these options the single purpose reverse mortgage is the least expensive one. Lender must agree with the use of loan by the borrower, whatever the way of utilization of the loan amount might be. However, once agreed the loan can only be used for the purpose for which it is granted.
While majority of the low income people will qualify for such loans, the problem is that they are not available everywhere.
